31 F. 543 -

31 F1d 543

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Case Text

UNITED STATES V. SAYLOR.

513

had beeJl a suit ill equity, and the allegations were that Hatcher & Co. were insolvent, or that the plaintiffs could not rElcover damages from them for the custody and detention of their engines, there might be soma propriety in this reply. It is, however, an equitable reply to a legal. defense, and cannot, in. the opinion of the court, be entertained at common law. ltjs; not alleged that HatGber& Co. are irresponsible, nor could such .evidence be heard in an, action at common law. The plaintiffs can bring their action against Hatcher &Co. for trover,and recover tpeirengines, ifthey are entitleli to do &0. 'They may either,recQver the property itself, or its highest value, since it w,rongfully by Hatchel' & Co. So it is not a proper reply to Hatcher & Co.'s claim for commissions, etc., that they refused to tum over these engines, and the is,excluded. The plainWfs thereupon took jwlgmentagainstthe maker of the and the action as to Hatcher & Co. .
'.

UNITED

STATEs'

v. SAYLOR aJld others.

«(Jf;rc'ldi ,@ourt, E. D. Michigan. !January 27, 1887"

'1:

2. ,

, Where a postmaster rented a post-office for the .government at $1,000 per year, and received a secret rebate of $150 from his· landlord, and also sublet portions of the space so J:ented ,for a news-stand and a confectionery stand, and receive,d rent therefor,. held, that he. and the sureties upon his bond were liabletd tpegovernment such rebate and r e n t . ' It is no defense to such c1aim for the rebate that the defendant had incurred expense in procuring and tittingup boxes, making repairs, etc., for which no allowance was made by the department; It isnodefense to the claim for rant that the specfalagents of the departmenthad frequently visited the office, seen the sUb-tenants in possession, and wade no· clllim for rent, it appearing that the department had no knowledge of these facts.OF SPECIAL AGENTS.

__OFFSET. '

To

GOVERmfENT-RENT OF OFFICE.

8.

(Syll(J,b1f8. by the Oourt.)

This was an action against principal and sureties upon a bond given by defendant Saylor, as postmaster at East Saginaw, in this state. Two breaches were averred in the that defendant had turned vO,uchers for rent to a much &reater amount than the rent actually paid; second, that he sublet to different persons portions of the post-of.fice building, and received rent therefor, Which 4e failed to report to the department. Plea, that if the said did 8ubletas charged, and received :rent therefor, the plaintiff, by its proper officers,. had full knowledge, during all sMh period, of the 'facts of such subletting, and the receipt by said defendant of moneys tWerefol'i that defendant openly treated saidmoneys so belongingtp himself individually, for which ,he was not accountable to plaintiff in his capacity as

FEDERAL

or 'otherwise; :and the said piaintiff did not, although well cognizant of the facts, make any claim to the money so received, hy way of reduction of the office rental allowed bY' plaintiff to the said defendant or otherwise, but did, during the whole of said peIiod, settle and adjust with defendant quarterly the accounts a.nd receipts of his office, and did treat and hold such sums so receivEld by defendant from said subletting as no part of the official receipts in which plaintiff had any interest or concern, and plaintiff is now estopped from making claim thereto. That" upon the expiration of defendant's term of office, plaintiff, by its proper officers, still having full knowledge of the facts j went over in detail and adjusted the entire account of defendant for the full period of his official term. The case was tried before a jury by the district judge. The facts, as they appeared Upon the trial, were substantially as follows:
Defendant entered upon the duties of his office, under this bond, February 3,1880, and. rented of one Lloyd the entire first floor of a building upon Washington street; that, in order to keep the post-office on this street, Lloyd and other property owners agreed to pay him (Saylor) so much money yearly as an inducement to retain tpe office there, Lloyd's subscription being $150, independent of the rent; that when he paid the rent he took receipts for $1,000 per year, but actually paid in money but $850. Defendant offered to show that, at the Umehe first rented this building of Lloyd, there were no post-office boxes or fixtures belonging to the government in connection with the office, and defendant supplied himself w.ith them at nis that the of such fixtures was $1,200, besides ,the expense of removing .them from the former office, refitting, and setting them up; that there were also continual expenses for repairs, enlargement of fixtures, and maintaining the requisite paraphernalia of the office. This testimony was ruled out by ,the court. In July, 1882, he removed the post-officefrom theI.loyd building to the Seligman building, and entered into substantially the same with Seligman that he had with Lloyd, except that Seligman agreed to do better by him, and gave him a rebate of $300 per year, taking receipts for a thousand dollars and paying but seven hundred. It also appeared that the defendant sublet a portion of the space rented for the post-office to one Gibbs, at a rent of $600 per ,year, to be used asa news-stand, and another portion to Jones &, Ostrander at eight to ten dollars per month, to be used as a confectionery stand. and that he received the stipulated rent from these parties, which he did not 0.0<lount for. There was also evidence tending to show that the inspectors and special agents of the post-offic,e department had full knowledge, from their own observation, of the existence of the news-stand; that they were fre.quently there, and made examination of the post-office premises, and the business; that no inquiry was ever made bysnch agents, or by the department relative to the fact of the subletting, ortlle amount, if any, received by defend:ant Saylor from that source; nor was complaint made against the existence Qr contin uance of such news-stand; nor was any claim ever made by the gov-ernment or its officers for the receipts from such subletting, nor notice that the same were postal revenue, and the said defendant never so regarded or treated the same. Defendant Saylor in his testimony stated that, in his conversation with the special agent, the latter asked him 11" hat rent he paid, but did not ask him any questiop.s abont the matter of subletting. It further appeared that .on January 7, 1882, the postmaster general addressed defendant a letter, stating that complaints had reached the department that a confectionery stand was kept in the post-office; that the department considered it improper in or

UNITED STATES V. SAYLOR.

545"

aroundarpost-oftlce in a large city, and the business removed, which, was done. There was also a news-stal'/d kept in the SeUgman building, of which the special agents hadthe '.". , There 'were quarterly settlements made with the government, and also annual settlements at the end of the fiscal year. A final account of all transactions withthe defendant waB settled June 30,1884, after he left the office. The defendant also offered to prove that the practice of establishing news· stands and other business in offices of the first and second class was throughout Michigan and other states; that at Cadillac there was a banl\,in the bUilding; that at Ann Arbor,Bay City, and West Bay ,City there were news-stands: that in the case of West Bay City the postmaeter himself had charge of the news-stand, and occupied it, and sold papel's in his own behalf; that all the special agents' of the department were familiar with these facts;' and that, in the insLructilms prepared and given by the, department. to its special agents and examiners, no. inquiry is made to sUbletting; also, mencing with 1860, a news-stand had been maintain,l)d in the office East Saginaw to the knowledge /Jf the government. from tha,t day to ,the time the. government first leased a building in its own behalf in 1885; and no claim , for receipts from such SUbletting had been asserted by the department at ani time. Defendant also offered to show. by the several defendant's sureties,in their behalf, that these quarterly settlements were shown by him to his said by him and assumed that everything pertain.. sureties, anci ing to his a,ccounts was aU right: that they knew ,about any Claim made for receipts growing out of the subletting to the, news:stand, and that' they were advised by him that the settlemtmts were made ann ually, and 'that the final settlement was niade satisfactorily to the government. One Turner. a witness produced on his behalf, swore that ,he had been one of the inspectors of the post-office department during a portion ofidefendant's term, and hadmaqe one inspection ofthe Saginaw office,()n the blank form prepared ,by the department. On cross-exl:j,mination, he swore .that Jle never learned that defendant was renting a portion of the bUilding out; and I?utting the money in hisown pocket. and that there was nothing in the iIispection made,which brought any such facts to his knowledge: and that he made no inquiry with respect to this, and had no instructions so to do. Upon this state of facts the jury were instructed to render a verdiet for the plaintiff for the excess of rent' allowed over that actually paid, and also for the amount of rent received from the subtenants. Motion was made for a new trial, and the case was argued before the circuit and district judges. John A. Edget and S, M. Outcheon, for the motion. C. P. Black, Dist. Atty., for the United States.
JACKSON, C. J. After a careful examination of this case, I concur in the conclusion reached by his honor, the district judge, that the plaintiff is entitled to recover the amount for which judgment has been rendered, and that the motion for a new trial should be denied. It is perfectly clear that the postmaster cannot hold or legally claim the benefit of the rebates made by his several landlords. To the extent that said rebates the rent below the sum allowed by the post-office department, the postmaster and his sureties are legally liable to refund to the government. Good faith and his relation to the government required thebona,fide expenditure of the allowance made, .for rent actually paid; and the postmaster could not lawfully appropriate it otherwisa, or by v.31F.no.9-35

546'

FEDERAL REPORTER.

voucher8jor rent paid_wQulfl conclude, him. on the question. :

any collusive arrangement with his' landlord derive a personal benefit thereftom in excess of the ri:int:a'ctually paid.. If thislVere otherwise doul;>tful uuder the of the postmaster himself, his quarterly

.

On the other branch of case, .viz., the right of the government to hold the postmaster liable for the amounts received from subletting portitlns of the premises rentedfor»ost-office purposes, I had, at first, some; , in view 'fact that the allowto the postll),aster was for, the,whole space (t:\J,e first £ioorof the buu4ingJrel1ted and appropr1!lted to the use of government, as shown. by,the proof, I am forced to the (lonclusion, that the pol'ltmaster could not devote any portion of such space topri'l:iate use, or takera personal benefit.tbl1illiself therefrom,wiJ}rout 0:. breach of the duty which every agent o':i\'es,t? he is intrusted to manage, viz,., that flpth, and the to conduct the. for the sole b.eneftt oftPe principnl.,. , , One of the department regulations (No. 72) required the ,postmaster to report whether "the clerk hire orot1lm' allowance was more or less than the Under thieregulation and requirement, could the ,wi'thou,t abrea,ch ' ofofficial duty, neglect to report that the S'600,'oi' aIlowance}or 'renCwas more than the service required, 'Y hile actually;rece,iving from subtenants rents for portions of the Very8pacB or premiBesappropriated.for ,postioffice purposes, and for which the allowance was 'made? ,':I think 'not., He could not be allowed to say that, altl;lOugh allowance is' made :in consideration of the. appropriation;of (the lirat floor) for post-of£;ice, inconnectionth!rewith, there is a,celitllinportioPPf the sp,ace, so appropriated and allowed for, which is not in fact needed to meet the wants of the ,government or, . the com,'enienceof the public, and "I will therefore devote that portion oithe prePlises. to :my privatehenefit, and thereby save a large part of the ,all()wa,nce.,made for ,rent.','Ris agency relations required him to make that w-ving, out ofspace or. premises rented for post-office purposes, for the benefit of his principal, the United States. It can hardly be doubted that, if he had. reported the actual facts, his allowance for rent would have been reduced in e:1\.Mt proportion to his receipts from. the post-office premises. The fact that the postmaster was himself the lessee oftha premises from the owner of the property does not affect the question cir change the principle on which we rest his liability. Take the allowance' oft! ,000 for clerk hite. Suppose the postmaster had ployeda at, ithat salary ,and had then entered into an agreement with· a neighborihg merchant that' one-fourth of the clerk's time and services,embmeiflg: the hours covered by his 'employment, should be devoted tokeeping,thebooks of such merohant, and for whi'Ch the postmaster waA'to'be'individually paid the' sum of $2150 peraunum, would it be seriotlsly insisted that the postmaster could retain the whole $1,000 for clerk hire under the allowance? Hardly, and yet it is difficult to see wherein consists the difference between making a profit on the clerk's

of

UNI'rEDSTATES 11. SAYLOR.

'time and 8eroiCes allOOted for ,by the govenmient and the making of 'a llimilar pront out of. the "8puce" appropriated to pi}sWilffice purposes,' for whicba like' allowance is made.' The long-continued ·practice of postmasters, and the apparent acquiescence of the government officials in acts and transactions of this character, cannot be invoked to legalize them. They are contrary to public policy, and violation of that good faith which everyone acting in the fiduciary capacity in the handling and (;\xpenditure of another's funds·must observe. r concur with the district judge in thinking. there is no error in the judgment heretofore rendered against the defendants,' and that the motion for a new trial should be overruled.
BROWN, D. J. I have seen no reason to change the opinion I expressed at the tnal. Defendant Saylor was' allowed a thousand dollars per year with which to rent the post-office at Saginaw. At the end of everyquarter an account was stated between the department and the landlord for the rent of the quarter, $250; and a receipt 'Vi'Qsappended and sent to the department as a voucher for the expenditure. The defendant paid the landlord in fact but $212.50. Now, by whatever name this difference is called, it is in fact a. less sum paid for rent than the vouchers represented. Gilding it· with the name of rebate does not change at all the legal or moral character of the transaction. The government placed in his hands a thousand dollars as an appropriation for· rent, and it was his duty to make the best possible terms for the government. He was at liberty to expend the entire amount, if it was necessary,· to procure a proper office; but if he could procure one for a less sum it was his duty to do it, and return the difference. It is quite possible that a large landowner, or an association of land-owners, might regard,the location of the post-office as so desirable for their property that' they would be willing to provide the department with a building free of expense. Upon defendant's theory, however, it would only be necessary for him to induce the landlord to give vouchers for a thousand dollars to justify him in putting the whole amount in his pocket. It is no· excuse that the defendant was obliged to expend money in procuring boxes and other fixtures, and in incurring of expenses forrepairs for which no allowance was made by the department. If the department had intended to allow for these expenditures, such allowance would have been made eo nominej if not, the defendant had no right to obtain a seoretconcession of the amount under another name. The amount of these expenditures, too, bore no relation whatever to the amount of the rebate. It may have been more, it may have been less; but, whatever it was, the rebate was not gaogedby it at all, nor had one any connection with the other. His retentiofi of the rents received from his subtenants is equally indefensible. He rented for the government, and as the agent of the postoffice department, certain space for the post-office. This space belonged absolutely to' the government dUring the continuance' of the lease. 11 it was larger than was necessary for the purpose of the post-office, and

I'EDERAL REPORTER.

defendant chose to lease the superfluous space to private individuals, he did so a,: the agent of the government, and the government is entitled to the rent. 'In other words, lle,has no right to receive rents as an individual for apace for which he pays lent as an agent for the government. If the department had placed in his hands a thousand dollars for office expenses, and had taken vouchers. from him to that amount, it might well be argl'led that it was no concern of the government what he did with the money, so long as proper' facilities were provided. But the money was placed in his hands to rent a post",office. The vouchers show a lease between the government and the landlord, and a receipt of the rent froIP Saylor as the disbursing officer of the government. Indeed, it was perfectly competent for the government to employ another person to lease this building, and pay the rent, if .it had chosen to do so. If this Case had arisen between private individuals,;:-if, for example, a merchant in Detroit; desiring to ,set up a branch establishment at East Sltginaw, were to send an agent there to rent a building, giving him a thonsanddQllars for that and he renteli a building at that sum, and, not needing the whole of it, sublet portiolls of it to other persons; -it would scarcely be contended that the money so received did not be-long to the principal. The fact, that the principal is the United States instead of;',an individual does not vary the legal rights of the parties. Between. the rebate of three hundred dollars, the rent of six hundred dollars from Gibbs, and the rent of eight to ten dollars pl;lr month from Jones & o.strnnder, the defendant 'in fact managed to obtain a post-office a,nd to apply the entire thousand dollars to his own use. for With equal justice he might reDt any other building of a dozen for the use ofLthe department, sublet all but one of these rooms for a much greater sum thaa he paid for the entire building, and make a handsome profit out of the transaction. But it is urged that the plaintiff is estopped to, make this claim by reason of the, fact that the inspeQtors and agents of the department were in t,4e habit of making frequent visits to East Saginaw, saw that portions of the post-office were occupiedby'others, and made no objections to it; that the accoupta of the defendant Were settled quarterly, and no claim whatever was eVer made thaUhese rents should beincludedj that the same thing had been done in Saginaw and in other places, in this and other states, for more than 20 years; that in the instructions prepared by the post-office department, and given to its agents and examiners, no inquiry is tnade as to subletting j and that all this constitutes a practical construction by the department that rents received in this way are not a part of the postal revenues, or "frOlllany other source connected with the postal of the bond, or to be accounted for to the department. While the contemporaneous and continuous construction, of a statute or other writing by heads of departments and accounting officers is undoubtedly entitled to weight in a doubtful case, the doctcine is a somewhat dangerous one to import into actions for money unlawfully withheld by officers of the,government, since defalcations of this kind are frequently rendered possible only by theconnival1ce

UN1TED STATES 'V. SAYLOR.

549

or loose practices of government agents. If these officers were always prompt -in the performance of their duties in the first instance, their omissions would not be allowed to become precedents. The remarks of Mr. Justice STORY in'delivering the opinion of the supreme court in U. S. v. Diclcscm, 15 Pet. 161, are pertinent in this connection: ",The construction g-iven to the laws by any department of the executive government IS necessarily ex parte, without the benefit of an opposing argument, in a suit where the very matter is in controversy; and, when the constl'uc"ion is once given, there is no opportunity to question or revise it by those who are most interested in it as officers, deriving their salary and emoluments therefrom, for they cannot bring the case to the test of jUdicial decision. It is only when they are sued by the government for some supposed default or balance that they can assert their rights. Their acquiescent'e, therefore, is almost from a moral necessity, when there is no choice but obedience, as a matter of policy or duty. But it is not to be forgotten that ours is a government of laws, and not of men; and that the judicial department has imposed upon it by the constitution the solemn duty to interpret the laws in the last resort; and, however disagreeable that duty may be, in cases where its own jUdgment shall differ from that of other high functionaries it is not at liberty to surrender or to waive it." But,when carefully analyzed, it will be seen that the testimony in this case falls far short of bearing out defendant's contention, of a practical constructionpy the post-office department. It merely teuds to show that certain subordinate officers, called "inspectors" or "special agents," whose duty appears to have been to make periodical examinations of the accounts and. business of postmasters throug-hout their districts, probably saw that certain persons were carrying on the sale of newspapers and confectionery within the post-office building, and might have inquired of the postmaster his authority to permit this; and that this had been the practice of, postmasters throughout this and other states, in different places, for a number of years. Conceding that all this was brought to their knowledge, they had no power to authorize or ratify this arrangement, and there is no evidence that they ever reported it to the postmaster-general, or to the accounting officers of the department. Their silence cannot be regarded as a construction of th6) statute, nor will their laches be imputable to the governmen't. U. S. v. Kirkpatrick, 9 Wheat. 720. The only evidence of the knowledge of the department officers is contained in a letter of the postmaster general to the defendant, directing him to discontinue the practice. It is impossible to extort from this any recognition of its legality or consent to its continuance. While it is quite probable, under the practice which had prevailed so long, that the defendant may have honestly supposed that he was entitled to do what he pleased with the space not needed for his post-office. I do not think thegovemment is estopped to claim the rent received by him.

Where a verdict was not complete at the term when it was rendered, the court has power to set it aside at any subsequent term at which the case is before the court for the purpose o·f perfecting the verdict. Where, in.a'suit against a collector of customs, commenced March 4,1861, and put in verdict May 27, 1864, by consent of counsel, a motion was made more than 20 years after.the date of the verdict to set it aside, held, that the motion would not be granted, unless the fact of such mistake be made clear.

2. SAME-MISTAKE.

At Law. Almon W. Griswold, for plaintiffs. Stephen A. Walker, U. S. Atty., and Thomas Greenwood, Asst. U. S. Atty., for defendants. WHEELER, J. This suit was commenced March 4, 1861. A verdict was in it for the plaintiffs for the excess of duties on charges and commissions, to be by the clerk, May 27,1864, by consent of counsel, before Mr. Justice NELSON and a jury. A like verdict, in 35 other cases, was taken at the same time, and in the same manner. No judgment has ever been entered on the verdict. The plaintiff' moves to set 8,side the verdict on the ground that it was entered by mistake. The defendant insists that the court has not power to set aside the verdict after the expiration of the term at which it was rendered without consent, or on motion made at that term, and extension of the term for the purposes of the motion. BrO'lWon v. Schulten, 104 U. S. 410; Phillips v. Negley, 117 U. S. 665, 6 Sup. Ct. Rep. 901. But this verdict was not a complete verdict on which any judgment could be rendered at that term, and has never become such at any term since. The case has been in court at every term for the purpose of perfecting the verdict, and within the power of the court for any purpose touching the verdict, as much as at that term. Redfield v. Ystalwera Irem 00., 110 U. S. 174, 3 Sup. Ct. Rep. 570. Prior to January 1, 1858, there appears to have been a firm composed of F. A. Spies, George Christ, and Louis Jay, which was succeeded on that day by another firrJl. composed of George Christ, Louis Jay, and Julius which on thefirst.day of January, 1861, was succeeded by the plaintifls, all of which were engaged in importation. The first firm had three, and the second seven, suits, and Augustus Schell"as collector, to rethe plaintiffs this one suit, cover back duties; and one of them of each of the former firms was to recover back excess of duties on charges and commissions. It is said that this suit was brought to recover back excessive duties on numerous importations of ffiOUBBeline de laines, paid successively by each of these firms, and belonging to the plaintiffs, as parties in interest, who have succeeded to the rights of the former firms; and that at the time of the